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China economy

Focus remains on US, China race for AI supremacy at Fortune tech event as investors eye future winners

  • China and the US remain locked in a battle to develop AI applications despite the two countries agreeing a temporary trade war truce at the weekend
PUBLISHED : Tuesday, 04 December, 2018, 7:02am
UPDATED : Tuesday, 04 December, 2018, 7:01am

Competition between China and the US in artificial intelligence took centre stage at the Fortune Global Tech Forum in Guangzhou last week, as the world’s two biggest economies remain locked in a battle to develop AI applications to solve real world problems.

“(Big companies) will benefit from a virtuous cycle of getting more data, better AI and therefore a better product that makes more money, and then they get an even larger market,” said Lee Kai-fu, chairman and CEO of Sinovation Ventures, in a speech via Skype at the conference on Thursday.

“So the Chinese companies will grow inside China and later outside China and the US companies will continue to expand their territories. Other countries are standing still relatively, so the wealth shift is one thing that is happening,” said Lee, speaking before the US and China agreed a temporary trade war truce at the weekend G20 meeting in Argentina.

AI has assumed a key role in Beijing’s Made in China 2025 master plan, which promises to lift the country’s industries – from robotics and aerospace to new materials and new energy vehicles – up the value chain, replacing imports with local products and building global champions able to take on Western giants in cutting-edge technologies. AI became an important pillar of the plan in 2017.

“It’s time for the US and China to think about their leadership roles to help the world move forward, but also for each country to start mapping their approach,” said Lee, noting continued wealth accumulation in both markets. The global race will depend on who can implement AI technology faster and better, rather than the invention of it, and China’s huge population will be a key advantage to achieve better implementation, said Lee.

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Yang Yuanqing, chairman and CEO of Lenovo, echoed Lee’s remark on China’s strengths while acknowledging the gap between the US and China currently.

“China is behind the US in many technologies such as chip, algorithm and large enterprise applications, and we still have a long way to go,” said Yang. “We should not be complacent, nor should we underestimate ourselves. We have strength in data generated from a huge population and as suppliers of internet of things devices drive into the world of intelligence.”

Chinese internet giants Baidu, Alibaba Group Holding, Tencent Holdings and voice intelligence specialist iFlyTek, were appointed as AI national champions in 2017 to spur further development. Meanwhile, companies like Yitu Technology and SenseTime – added to the list of national champions this year – are already developing technologies to help screen for cancer and power driverless cars.

Sensing a threat to its global technological dominance, the US has seized on Beijing’s Made in China plan as an example of what it sees as unfair state intervention in China's economy. However, Gary Rieschel, a managing partner at Qiming Venture Partners, offered a different perspective, saying China’s AI ecosystem was largely the result of private enterprise and not the state.

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“The real asset is not data but people. It’s a terrible mistake for the US and Chinese governments to talk about AI policies because it’s not the government that will achieve success in AI but entrepreneurs on the ground,” said Rieschel. “We’re sharply diminishing the contribution of Chinese entrepreneurs to the existing AI ecosystem and future success by saying the government is directing this.”

Other investors agreed that private enterprise would make a big contribution to AI in future.

“Ten years from now, the AI-enabled companies will be far more valuable than the current FAANG (Facebook, Apple, Amazon, Netflix and Google) and BAT (Baidu, Alibaba, Tencent) stocks as a group,” said Jim Breyer, founder and CEO of Breyer Capital and one of Facebook's first investors.

“There’ll be 18 to 20 companies – many of them might be trillion-dollar companies 10 years from now – and 18 of the 20 companies will be in the US and China.”